Trump Executive Order on Digital Assets Charts a Fresh Course for the Industry

On Jan. 23, President Trump issued an executive order entitled “Strengthening American Leadership in Digital Financial Technology.” The order signals a sea change in the federal government’s treatment of Bitcoin and other digital assets. It also repeals prior and possibly conflicting executive orders from the Biden administration.

Out of the gate, it is notable that the framework outlined is aimed at both the President’s cabinet as well as certain independent regulatory commissions within the executive branch. This approach could see a harmonization of regulatory guidance and get all parties “rowing in the same direction.”

The order begins by affirming the basic principle that Americans should be free to use open blockchain networks like Bitcoin. While this statement is not earth-shattering on its face, it acknowledges the administration’s policy of protecting individuals’ ability to mine and transact “without unlawful censorship, and to maintain self-custody of digital assets.” This contrasts with policy proposals of the recent past that could have threatened elements of digital asset use and self-custody.

Other critical aspects of the order include the promotion of “legitimate dollar-backed stablecoins,” which rely on blockchains to issue and use dollar equivalents outside the traditional financial system rails.

Notably, after years of reported challenges accessing the financial system, the order promises digital asset-focused companies “fair and open access to banking services for all law-abiding” participants. This is a nod to the winding down of “Operation Choke Point 2.0,” an alleged policy under the Biden administration of restricting access to the banking system for cryptocurrency industry participants.

The order also prohibits the creation of Central Bank Digital Currencies (“CBDCs”) within the United States. CBDCs have been the subject of much criticism within the industry due to the view that their widespread use could provide the issuing government with unprecedented and potentially intrusive insight into individual transactions. Additionally, CBDCs provide the technical ability to freeze individual citizens’ wallets and accounts without observing due process requirements.

Finally, the order establishes the “President’s Working Group on Digital Asset Markets,” made up of officials from a variety of federal agencies and departments representing a diverse array of interests.

Pursuant to specific timelines set forth in the order, the working group will identify “regulations, guidance documents, or other items that affect the digital asset sector,” and submit recommendations as to whether they should be rescinded or modified. The SEC seems to have been first to strike on this front, already rescinding Staff Accounting Bulletin 121, which had long been seen as an impediment to banks and other traditional financial institutions engaging with the digital asset industry. The working group is also charged with studying whether a strategic bitcoin ceserve or stockpile of digital assets should be pursued by the federal government. This provides an executive framework for perhaps eventually implementing the B.I.T.C.O.I.N Act introduced last year by Senator Cynthia Lummis of Wyoming, who now chairs the newly created Senate Banking Subcommittee on Digital Assets.

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